Golden Spoon Investment Portfolio - Chapter 325

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This chapter was translated by Lunox Novels. To support us and help keep this series going, visit our website: LunoxScans.com
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325. This is what they mean by trying to stop a flood with a hoe when you need a shovel.

“7.4 at 30 million sold!”
“Okay. Done!”

With the New York foreign exchange market in full swing, the Eldorado Fund’s forex trading team worked feverishly under Tyler’s command, executing trade after trade.

“The Bank of Thailand is placing massive buy orders for baht!”

Tyler, his shirt sleeves rolled up and a headset perched on his head, glanced at the trader who had just spoken and asked a question.

“How much are we talking?”
“Just over 360 million dollars.”

Standing at his station, Tyler bent forward to check the monitor before him as he absorbed the answer.
Though the Bank of Thailand had indeed placed buy orders, the sheer volume of baht being sold was so overwhelming that it was like dropping a single drop of ink into a vast ocean—the transactions executed and disappeared in an instant, swallowed without a trace.
It was inevitable, given that the Eldorado Fund alone had sold over 600 million dollars’ worth of baht in the New York forex market that day.

“They must know that this amount is nowhere near enough to suppress the upward pressure, yet they’ve only managed to scrape together this much. It’s clear they no longer have the capacity to actively defend the exchange rate in any market outside Bangkok.”

Hong Kong, Singapore, and Malaysia—which had stood alongside Thailand against the hedge funds’ assault—had exhausted their foreign reserves and withdrawn from the fight. Thailand’s struggle to hold the line alone was inevitable.
As if to prove this point, the exchange rate that had been pushed up to 24 baht per dollar was now sliding downward again, creeping toward 28 baht.
Yet with each passing hour, the dollars the Bank of Thailand was spending on baht purchases dwindled further.
Tyler watched as the Bank of Thailand’s buy orders vanished without a trace, consumed entirely, leaving only a sea of baht sell orders flooding the monitor screen. A dark smile spread across his face as he muttered to himself.

“It’s almost over now.”

***

Two days later.
Three men sat gathered in the office of the Prime Minister’s Residence in downtown Bangkok.
The atmosphere in the room hung heavy, reflecting the desperate situation Thailand now faced.
Prime Minister Chavalit Yongchaiyudh, chain-smoking continuously, stubbed out a half-finished cigarette in a crystal ashtray and asked a question.

“Is there really no other way?”

Chatchai, the Finance Minister with a haggard face sitting on the sofa to the right, answered in a weak voice.

“We’ve already exhausted every measure available to us. There’s nothing more we can do.”
“What about the request for assistance from Japan?”

Chatchai shook his head.

“We’ve been informed that the Japanese banks, including Sumitomo and Sanwa, can only extend the maturity of foreign debt they hold. Government-level bailout support is not feasible.”

Even Japan, their last hope, had turned its back on them. Chavalit Yongchaiyudh, the Prime Minister, could not hide his despair.
Warit, the Bank of Thailand Governor with an equally grim expression, spoke in a somber tone.

“Our remaining foreign exchange reserves are now only around 8 billion dollars. If we continue depleting dollars at this rate, we’ll be completely drained within four days at most.”

The foreign exchange reserves, which had stood at 38 billion dollars just at the end of last year, had melted away in an instant while defending the exchange rate, leaving barely that much.
Chatchai, with a troubled expression, tried to persuade the Prime Minister.

“At this point, the exchange rate is no longer the issue. In the worst case, we may have to declare default.”
“Sigh.”

The Prime Minister let out a sigh and wiped his face with a dry hand. After pondering for a long while, he reluctantly spoke.

“If we introduce a floating exchange rate system, wouldn’t that solve all our problems?”

Chatchai leaned forward and responded.

“Since we won’t need to defend the exchange rate anymore, we can preserve our remaining foreign exchange reserves. However, considering that short-term foreign debt maturing within a year amounts to 45 billion dollars, we’ll need support from the International Monetary Fund to completely resolve the foreign exchange crisis.”
“Do we absolutely have to turn to the International Monetary Fund?”

The Prime Minister, upon hearing this, displayed a reluctant and negative attitude.
The devaluation of the baht had already been a major political blow, but if they were to receive International Monetary Fund bailout support, the coalition cabinet would collapse that very day, and the Prime Minister’s political career would effectively be over.
Chatchai, recognizing this immediately, held back the hesitant Prime Minister and persuaded him once more.

“If we don’t accept the bailout, introducing a floating exchange rate system won’t produce significant effects. It could actually create even greater chaos.”

Yet the Prime Minister, unable to let go of his reluctance, decided to postpone the matter for now.

“Let’s introduce the floating exchange rate system first, and if the situation doesn’t improve even after that, we’ll reconsider seeking International Monetary Fund bailout support.”

Upon hearing the story, Finance Minister Chatchai let out a deep internal sigh.
Now that they had decided to abandon the defense of the baht, they needed to untangle this knot all at once—any hesitant retreat would only magnify the burden they’d have to bear later.
Yet he couldn’t force a bailout request on anyone, so Finance Minister Chatchai exhaled a quiet sigh of resignation.
Warit, the bank governor seated across from him, shook his head slowly, his expression equally troubled.
Finance Minister Chatchai reached into his inner pocket and withdrew a white envelope, placing it before Prime Minister Chavalit Yongchaiyudh, hoping desperately to avoid the situation he feared.

“What is this?”

Prime Minister Chavalit Yongchaiyudh narrowed his brow and asked.
Finance Minister Chatchai responded with a calm expression, like a man who had already surrendered everything.

“My resignation letter.”
“Now, hold on.”

Under the gaze of Prime Minister Chavalit Yongchaiyudh, whose brows furrowed, Finance Minister Chatchai continued in a measured voice.

“Just days ago, I assured everyone there would be absolutely no devaluation of the baht. If I suddenly reverse course, won’t the people’s criticism and anger be immense?”
“….”
“To appease the people’s anger, however justified, and to manage this chaotic situation, someone must take responsibility for the failure to defend the baht.”

Prime Minister Chavalit Yongchaiyudh, understanding the implication, gazed steadily at Finance Minister Chatchai with his arms crossed.

“You’re saying you’ll resign and take responsibility for the baht’s devaluation?”
“Yes, that is correct.”

Finance Minister Chatchai spoke with a bitter expression.

“As head of the Ministry of Finance, I failed to prevent the speculators’ assault beforehand and bear responsibility for bringing about this current crisis.”

Everyone knew that the economic downturn beginning with the yen appreciation had served as a detonator, causing the economic bubble nurtured since the previous administration to burst—providing ammunition for the speculators’ attack.
Rather, Finance Minister Chatchai had been working tirelessly to reform Thailand’s deeply festering economy before the problem erupted.
Prime Minister Chavalit Yongchaiyudh knew this well, but if Finance Minister Chatchai took responsibility and resigned, he could at least reduce some of the criticism directed at himself—so no words of dissuasion came forth immediately.
After a brief silence, Prime Minister Chavalit Yongchaiyudh gave a small cough and accepted the resignation letter that Finance Minister Chatchai offered.

“If that’s truly your wish, then so be it. You’ve worked hard all this time.”

Though he had anticipated it to some degree, Finance Minister Chatchai couldn’t help but smile bitterly inwardly at how readily the Prime Minister accepted his resignation without even a token gesture of dissuasion.

‘Now the real problem begins.’

As the heavy burden that had weighed upon my shoulders lifted, a sense of lightness washed over me, yet my chest tightened with anxiety about Thailand’s economic future.

***

Seok-won lay alone in the spacious penthouse bed when the shrill ring of his mobile phone jolted him awake, his body stirring restlessly.
Seok-won raised his upper body and reached to the side, grasping his phone and answering the call.

“Hello.”
[Boss, it’s me.]

The caller was Landon Shore.
Seok-won picked up the Rolex watch he’d left on the nightstand and checked the time—it had just passed 4 in the morning.

“What’s the matter at this hour?”

His voice emerged deeper than usual, still heavy with sleep.

[Just now, the Bank of Thailand announced they’re abandoning the fixed exchange rate system they’ve maintained against the dollar.]

Seok-won’s eyes snapped open, his eyebrows rising sharply as he pressed for confirmation.

“Are you certain?”
[Yes, sir. CNBC is broadcasting breaking news about it right now. You should check it.]

Seok-won immediately left the bed and grabbed the remote from the table, turning on the television mounted on the wall.
Just then, footage of Prime Minister Chavalit Yongchaiyudh holding a press conference appeared on screen.

[…For these reasons, we have decided to shift from a multiple currency basket system that fixed exchange rates centered on the US dollar to a floating exchange rate system.]

Prime Minister Chavalit Yongchaiyudh paused briefly as camera flashes erupted around him, then continued with a somber expression.

[Additionally, we will implement austerity measures by cutting the government budget by 10% this year, and we will consolidate and reorganize 16 commercial banks facing liquidity crises to stabilize the financial market. To attract foreign investment, we will raise the benchmark interest rate from the current 19.5% to 21% effective immediately. I understand this will cause hardship in the short term, but I ask for your understanding that these are unavoidable measures for economic stability, and I urge you to trust and follow the cabinet’s leadership.]

As he finished speaking, the assembled journalists rose from their seats and bombarded him with questions, but Prime Minister Chavalit Yongchaiyudh offered no response, instead leaving the conference hall alongside Warit, the Bank of Thailand governor.
The screen switched to the studio, where a blonde female anchor summarized and reported on Prime Minister Chavalit Yongchaiyudh’s announcement, and Seok-won’s lips curved into a smile.

“How is the foreign exchange market reacting?”

At his question, Landon Shore responded with barely contained excitement.

[The moment the announcement came out, the exchange rate plummeted from 27.70 baht to 32.55 baht—a staggering 19.6% collapse!]

The Bank of Thailand, which had been propping up the currency from below all this time, had completely withdrawn from defending the exchange rate, so the baht’s collapse was inevitable.

[Startled by Prime Minister Chavalit Yongchaiyudh’s sudden announcement of currency surrender, Thai companies are rushing to buy dollars, and it appears the baht will fall further in the coming period.]
“With Thai companies and banks needing to repay over 45 billion dollars in short-term foreign debt within a year, they’ll be desperate to secure dollars.”
[Because of this, rumors are spreading that Thailand might declare default, causing Thai bond prices to plummet in the sovereign debt market.]
“Since the debt they need to repay exceeds their foreign currency reserves, such concerns are entirely justified.”

Even if running out of foreign currency and abandoning the exchange rate band was unavoidable, expecting foreign capital to return through interest rate hikes alone without requesting IMF assistance was far too optimistic.

‘This is what they mean by using a spade when you should have used a hoe.’

The Korean government had similarly dithered in the face of currency speculators’ attacks and made the situation far worse, so I was hardly in a position to criticize.
One thing was certain regardless: the baht would fall much further from here.
My eyes gleaming, I gripped the phone in my hand more firmly and spoke.

“There’s still more profit to be made, so maintain the baht short position as is.”
[Understood.]

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This chapter was translated by Lunox Novels. To support us and help keep this series going, visit our website: LunoxScans.com
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